1. Launch Vehicle Business Workshop

2. Faculty John M. Jurist, Ph.D. David L. Livingston, D.B.A.

3. Tasks Characterize notional vehicle Principles of cost engineering Estimate development costs Estimate production costs Synthesis of financial proforma Market assumptions / factors

4. Goals for Participants Step through process of notional vehicle characterization Gather data required for cost estimation Learn principles and concepts of Transcost Estimate development and production costs Synthesis of financial proforma Study variable sensitivities Discuss market assumptions / factors

5. Characterize Notional Vehicle Define mission characteristics Incorporate understanding of technology Rough out vehicle concept

6. Notional Vehicle Disclaimer Any similarity to Space-X Falcon-1 is purely coincidental Public domain information from Space-X is useful for sanity checks

7. Notional Vehicle Characterization Deliver payload of 1,600 pounds to 200 km low earth orbit (LEO) Expendable launch vehicle (ELV) Vertical take off (VTO) Two stage (TSTO) Conventional bipropellant liquid Liquid oxygen (LOX) and kerosene (RP-1)

8. Notional Flight Parameters 200 km circular orbit 7,784 meters/sec circular velocity 30% margin for gravity, air drag, other Total launch speed change capability Delta-V = 10,114 meters/sec Includes 460 meters/sec Earth spin boost

9. The Rocket Equation M o /M f = e (v/c) orv = c ln(M o /M f ) M o = GLOW = liftoff mass M f = burnout mass c = g * I sp = exhaust velocity v = ideal burnout velocity

10. Space-X Falcon-1e Stage 1Stage 2 Payload11,896 lbs1,590 lbs + 300 shroud Structure + Motor4,000 lbs1,125 lbs Usable Propellant69,000 lbs8,881 lbs GLOW85,000 lbs11,896 – 300 shroud Thrust (vacuum)115,400 lbs7,000 lbs Motor T/W96:142:1 Motor I sp (vacuum)304 sec327 sec Burn Time169 sec418 sec Delta-V (ideal)4,995 meters/sec4,653 meters/sec

11. Cost Engineering What is it? Ignore cost (cost + percentage) and optimize performance Design to cost (cost + fixed fee) and meet performance Cost engineering (cost + incentive) minimize life cycle (complete or partial) cost

12. Technology Readiness Levels (1) TRL1Basic principles observed and reported TRL2Technology concept and prototype demonstration or application formulated TRL3Analytical and experimental critical functions or characteristics demonstrated TRL4Component or breadboard validation in laboratory TRL5Component or breadboard validation in relevant environment

13. Technology Readiness Levels (2) TRL6System/subsystem model or prototype demonstration in relevant environment (minimum for all systems for development) TRL7System prototype demonstration in space environment TRL8System completed and flight qualified by test and demonstration TRL9System flight proven by successful mission operations

14. Cost Engineering Most commonly used model: Transcost Price-H (Burmeister): Component costs adjusted by various complexity factors TRASIM: Defined subsystem costs NASCOM: Database adjusts for production and avionics complexity

15. What is Transcost? Dr. Dietrich E. Koelle Statistical-Analytical Model for Cost Estimation and Economical Optimization of Launch Vehicles Parametric cost estimation: Method of estimating cost per unit mass

16. Transcost 7.2 (1) Dr. Dietrich E. Koelle Parametric (cost surrogate per unit mass) Weighting factors for team experience, team skill base, vehicle complexity, etc. Learning factor for production Cost = A * Mass B * f 1 * f 2 * f 3 * … * f N

17. Transcost 7.2 (2) Development submodel Flight tests (intermediate) Production vehicle cost submodel Refurbishment (intermediate) Ground and flight operations submodel

18. Cost – Why a Surrogate? Engineering or production man years cleaner variable than dollars Can be adjusted for inflation Can be adjusted for productivity Can be adjusted for currency fluctuations

19. Engineering Man Year Inflation (1) 1960 = $ 26,000 1970 = $ 38,000 1980 = $ 92,200 1990 = $156,200 2000 = $208,700 2007 = $252,000

20. Engineering Man Year Inflation (2)

21. Development Factors f 1 Technical development status f 2 Technical quality f 3 Team experience f 6 Deviation from optimum schedule f 7 Program organization f 8 Engineering man year correction

22. Development Cost Submodel (1) Solid propellant rocket motors Liquid propellant rocket motors with turbopumps Pressure fed liquid propellant rocket motors Airbreathing turbo- and ramjet engines Solid propellant rocket boosters (large) Propulsion systems / modules Expendable ballistic launch vehicles

23. Development Cost Submodel (2) Reusable ballistic launch vehicles Winged orbital rocket vehicles HTO 1 st stage vehicles, advanced aircraft VTO 1 st stage flyback rocket vehicles Crewed re-entry capsules Crewed space systems

24. Unit Production Cost Submodel Solid propellant rocket motors Liquid propellant rocket motors with turbopumps Airbreathing turbo- and ramjet engines Propulsion modules Ballistic rocket vehicles (expendable & reusable) High speed aircraft / winged first stages Winged orbital rocket vehicles Crewed space systems

25. Ground & Flight Ops Submodel (1) Prelaunch ground operations Launch and mission operations Ground transportation and recovery Propellants, gases, and material Program administration and system management Technical system support Launch site and range cost

26. Ground & Flight Ops Submodel (2) Function of launch rate Learning factor applies RLV reuse and refurbishment relevant Spares production and inventory Detailed analysis beyond scope of this workshop

27. Development Cost Configure system Develop mass budget Develop appropriate margins

28. Suggested Development Mass Margins StudyPhase APhase B First of Kind15-20%12-15% Advanced Design10-15% 7-10% Conventional Design 7-10% 5-8%

29. Historical Development Mass Growth (Percent) Thor 6.3 Saturn S-IV 13.7 Saturn S-IVb12.5 Lunar Lander 27 STS Orbiter 25 Airbus A-380 3

30. Existing Structural Safety Factors ELV = 1.10 – 1.25 RLV = 1.35 – 2.0

31. Safety Factor Comparables Unpressurized Structure Pressurized Structure Lines/ducts >4 cm dia Commercial Aircraft 1.5 2.0 2.5 ELV 1.1 1.25 RLV 1.35-1.5 1.8-2.0 2.5 STS Orbiter 1.35 1.8 1.5

32. Cost Driver -- Payload Payload is more important cost driver than GLOW 20% increase in payload increases ELV development by 7% 20% increase in payload increases RLV development by 4% Cost effective to oversize vehicle to assure payload sufficiency

33. Estimate Development Cost First stage motor(s) Second stage motor(s) First stage vehicle Second stage vehicle Correct for various relevant factors Convert into dollars

34. f 1 Technical Development Status 1.3-1.41 st generation, new concept approach with new techniques and technologies 1.1-1.2New design with some new technical/operational features 0.9-1.1Standard projects, state of art, similar systems operational 0.7-0.9Design modifications of existing systems 0.4-0.6Minor variation of existing projects

35. f 2 Technical Quality Specific definition depends on submodel

36. f 3 Team Experience 1.3-1.4New team, no direct relevant experience 1.1-1.2Partly new activities for team 1.0Company team with some related experience 0.8-0.9Team has developed similar projects 0.7-0.8Team has superior experience with this type of project

37. f 6 Deviation from Optimum Schedule (1) % OptimumCost Factor 70 1.15 80 1.08 90 1.03 100 1.0 110 1.03 120 1.13 130 1.23 140 1.32 150 1.4 170 1.5

38. f 6 Deviation from Optimum Schedule (2)

39. f 7 Program Organization “Too many cooks spoil the broth” f 7 = n 0.2 n = participating parallel organizations Not number of subcontractors if organized strictly according to prime/sub principle

40. f 8 Engineering Man Year Correction USA f 8 = 1.00 France f 8 = 0.79 China f 8 = 1.34 Correction factor f 8 based on effective working hours/year * relative education * relative dedication

41. Development Cost Submodel (1) Solid propellant rocket motors MYr = 16.3 M 0.54 f 1 f 3 M = motor net mass (kg) Liquid propellant rocket motors with turbopumps MYr = 277 M 0.48 f 1 f 2 f 3 f 2 = 0.026 (ln N Q ) 2 M = motor dry mass (kg) N Q = number of qualification firings (vs 12,000 endurance cycle firings for jet engines)

42. Development Cost Submodel (2) Pressure fed liquid propellant rocket motors MYr = 167 M 0.35 f 1 f 3 M = motor dry mass (kg) Airbreathing turbo- and ramjet engines MYr = 1380 M 0.295 f 1 f 3 M = engine dry mass (kg)

43. Development Cost Submodel (3) Solid propellant rocket boosters (large) MYr = 10.4 M 0.6 f 1 f 3 M = booster net mass (kg) Propulsion systems / modules MYr = 14.2 M 0.577 f 1 f 3 M = system dry mass with motors (kg)

44. Development Cost Submodel (4) Expendable ballistic launch vehicles MYr = 100 M 0.555 f 1 f 2 f 3 f 2 = K ref / K eff M = vehicle dry mass without motors (kg) K ref = reference net mass fraction (from graph) K eff = (M + residuals) / propellant Reusable ballistic launch vehicles MYr = 803.5 M 0.385 f 1 f 2 f 3 f 2 = K ref / K eff M = vehicle dry mass without motors (kg) K ref = reference net mass fraction (from graph) K eff = (M + residuals) / propellant

45. Development Cost Submodel (5) (Liquid Ballistic ELV K REF ) LH 2

46. Development Cost Submodel (6) (Liquid Hydrogen Ballistic RLV K REF )

47. Development Cost Submodel (7) Winged orbital rocket vehicles MYr = 1421 M 0.35 f 1 f 2 f 3 f 2 = K ref / K eff M = vehicle dry mass without motors (kg) K ref = reference net mass fraction (from graph) K eff = (M + residuals) / propellant HTO 1 st stage vehicles, advanced aircraft MYr = 2880 M 0.241 f 1 f 2 f 3 f 2 = Mach 0.15 M = vehicle dry mass without engines (kg) VTO 1 st stage flyback rocket vehicles MYr = 1462 M 0.325 f 1 f 3 M = vehicle dry mass without motors (kg)

48. Development Cost Submodel (8) (Liquid Hydrogen Winged RLV K REF )

49. Development Cost Submodel (9) Crewed re-entry capsules MYr = 436 M 0.408 f 1 f 2 f 3 f 2 = (N*TM) 0.15 M = reference mass (kg) N = crew number TM = maximum mission design lifetime (days) Crewed space systems MYr = 1113 M 0.383 f 1 f 3 M = reference mass (kg)

50. Development Margins Requirement changes during development Technical changes or “improvements” Technical component/software failures Changes in personnel or management structure Funding limitations per budget year

51. Development Cost Risks Technology not fully qualified Vehicle specifications incomplete at start of project and not frozen Masses underestimated – optimistic assumptions Schedule assumes no mishaps or delays

52. Development Mass and Cost Factors Dry MassDevelopment CostELV Mass Development Cost ELV 1.0 Ballistic RLV 2.2 2.4 1.6 Winged Orbital RLV 4.1 4.0 2.1 Flyback Booster 5.7 3.4 1.8

53. Production Costs Assume preproduction prototype Assume successful tests

54. Estimate Production Costs First stage motor Second stage motor First stage vehicle Second stage vehicle Correct for production numbers Convert to dollars

55. Production Learning Factor f 4 (1) Defined by T. P. Wright in 1936 f 4 Cost reduction with production Each doubling of production of identical units reduces costs by a fixed percentage Percentage varies directly with production rate and inversely with size and complexity

56. Production Learning Factor f 4 (2) Aerospace manufacturing reduction approximately 10-15% per doubling Agena-A 15% Ariane-4 12.5% STS ET 10%

57. Production Learning Factor f 4 (3) If Learning Factor is L = 10% and C N is the cost of the N th unit, The 2 * N th unit will cost 90% of C N. C 2N = (1 – L/100%) * C N C N = C 1 * (1 – L/100%) (log N/log 2)

58. Production Learning Factor f 4 (4) Koelle uses n * f 4 to obtain average cost of producing n units We use f 4 variant with First Unit Cost (TFU or FUC) to obtain cost of each unit produced

59. Unit Production Cost Submodel (1) Solid propellant rocket motors MYr = 2.3 M 0.399 f 4 M = net motor mass (kg) (cost includes propellant) Liquid propellant rocket motors with turbopumps & LH 2 MYr = 5.16 M 0.45 f 4 M = motor dry mass (kg) Pressure or pump fed liquid rocket motors without LH 2 MYr = 1.9 M 0.535 f 4 M = motor dry mass (kg)

60. Unit Production Cost Submodel (2) Airbreathing turbo- and ramjet engines MYr = 2.29 M 0.545 f 4 M = engine dry mass (kg) Propulsion modules MYr = 4.65 M 0.49 f 4 M = system dry mass with motors (kg)

61. Unit Production Cost Submodel (3) Ballistic rocket vehicles (expendable & reusable) MYr = 0.83 M 0.65 f 4 M = vehicle dry mass without motors (kg) Use 1.30 instead of 0.83 if LH 2 is propellant) RLV has 40% higher dry mass than ELV

62. Unit Production Cost Submodel (4) High speed aircraft / winged first stages MYr = 0.367 M 0.747 f 4 M = vehicle dry mass without engines (kg) Winged orbital rocket vehicles MYr = 3.75 M 0.65 f 4 M = vehicle dry mass without motors (kg) Crewed space systems MYr = 0.16 M 0.98 f 4 M = reference mass (kg)

63. Notional Vehicle Characterization Assume 300 lb payload shroud dropped at 2 nd stage ignition Assume 460 meter/sec boost from Earth spin and launch to east Total Delta-V = 10,114 meters/sec Same structural net mass fractions and motor thrust to weight ratios as Falcon-1e

64. Notional Vehicle Data Spreadsheet: Scale-by-Payload.xls

65. Notional Vehicle Stage 1Stage 2 Payload11,967 lbs1,600 lbs + 300 shroud Structure + Motor4,013 lbs1,130 lbs Usable Propellant69,419 lbs8,938 lbs GLOW85,399 lbs11,967 – 300 shroud Thrust (vacuum)115,400 lbs7,000 lbs Motor T/W96:1 (turbopump)42:1 (pressure fed) Motor I sp (vacuum)304 sec327 sec Burn Time183 sec418 sec Delta-V (ideal)4,996 meters/sec4,658 meters/sec

66. Data for Cost Estimation (1) Stage 1 Stage 2 Structure + Motor 4,013 lb 1,824 kg 1,130 lb 514 kg Motor 1,202 lb 546 kg 167 lb 76 kg Propellant69,419 lb 31,554 kg 8,938 lb 4,063 kg Motor qualification firings 300

67. Data for Cost Estimation (2) Assume negligible residual propellant Assume clean sheet with new team Assume conventional aerospace rules of thumb for masses, materials, assembly Assume aerospace standard overhead Assume a management miracle happens

68. Data for Cost Estimation (3) Assemble new and young team from scratch f 1 = 1.1 New design with some new technical / operational features f 3 = 1.3 New team, no direct relevant experience 1 MYr = $252,000 (2007)

69. Data for Cost Estimation (4) Stage 1 Stage 2 Motor R&D 6,902 MYr1,087 MYr Vehicle R&D13,843 MYr7,099 MYr Motor TFU 55.35 MYr 19.28 MYr Vehicle TFU 86.76 MYr 43.26 MYr

70. Data for Cost Estimation (5) Traditional aerospace industry costing Total R&D = 28,931 MYr = $7,290 Million Total TFU = 204.65 MYr = $ 51.57 Million Assume miraculous management in a new startup reduces costs by 95 percent relative to traditional aerospace industry Total R&D = $365 Million over 3 years Total TFU = $ 2.58 Million

71. Data for Cost Estimation (6) Assume first preproduction prototype launches successfully Learning curve doesn’t apply to 2 nd unit if 1 st unit fails because design changes cost money Production of 20 units annually for 10 years Spreadsheet: Proforma.xls

72. Data for Cost Estimation (7) Assume 7%/yr interest and 4%/yr inflation Assume $5 million sales price per vehicle Production of 20 units annually for 10 years Assume learning factor of 12% Red ink for first 12 years Spreadsheet: Proforma.xls

73. Problems for Cost Estimation Examine effects of learning curve factor Examine effects of interest cost Examine effects of sales price and manufacturing costs Examine effects of increased R&D costs and/or development delays What happens if initial test fails or demand doesn’t match production? Spreadsheet: Proforma.xls